There has been a reasonable degree of damage beneath the surface on a stock-level; credit markets, however, have not shown the same degree of uncertainty.

In an interview with Bloomberg TV, former New York Fed President Bill Dudley mentioned the lack of cooperation by financial markets; in other words: the Fed isn't seeing the type of sea change it would like to see in order for a reverse wealth effect to kick in.

Just how much the Fed will be able to tighten financial conditions will likely depend on market signals such as the GS Financial Conditions Index and Corporate High Yield OAS.

If we were to look at specific stocks that are highly sensitive to credit conditions: homebuilders, do-it-yourself outlets ($HD $LOW), banks ($JPM, $C, $GS) as well as private equity transactions financed via debt offers -- there are many more.

I hesitate to paint a doom & gloom scenario; it is, however, valuable to keep an eye on the tone of credit markets and be aware of sub-surface dynamics.